SBA EIDL loans were a snap last year, a mess this year, applicants and loan officers say

Brandon Friedman, a US Army veteran and former Obama staffer, believes his frustration with the US Small Business Administration is the reason business owners don’t like dealing with government.

His predominantly online company, Dallas-based Rakkasan Tea Company, relies on tea supply from Asian countries hit by the Delta variant.

“If I can’t get my tea, there’s nothing to sell,” Friedman said.

Friedman and his veteran colleague and co-founder Terrence “TK” Kamauf were delighted to receive an email from the SBA on April 7 telling them they were eligible for an increase in their COVID-19 Economic disaster loan, a low-interest loan for small businesses and nonprofits experiencing loss of income caused by the virus. The company initially received an EIDL advance of $ 1,000 and later a loan of $ 23,000. In April, they were told they were eligible for an increase of $ 72,000.

On April 15, they told the SBA that they wanted to apply for the increase. Ten days later, they submitted supporting documents but soon realized that they had chosen the wrong tax form. But there was no way to get back into the form and fix the error.

“This begins our saga,” Friedman said.

He emailed and called customer support and finally got advice on how to fix the error on May 14. He submitted the signed form on May 16.

Months passed. He continued to call the SBA, who eventually told him he had been provisionally denied but couldn’t say why. Friedman said he suggested it was likely a tax form issue and he could resend the voucher. They told him to wait.

Last week Friedman received a letter dated July 2 that said Rakkasan’s claim was denied due to the tax form.

“We have literally tried to help the SBA not make this mistake since before I submitted the signed application,” said Friedman, who previously worked at the Department of Veterans Affairs.

“If I’ve worked in a federal agency and know how to navigate a federal bureaucracy and can’t figure out how to navigate this area, then how is the common business owner going to do? “

Applicants and loan officers alike say last year’s EIDL loan applications were a snap, and the money quickly reached bank accounts. In fact, the SBA’s COVID relief programs – including the two strands of the Paycheck Protection Program and the Restaurant Revitalization Fund – deserve praise, they said.

But they don’t mince their words about this second wave of EIDL loan increases, calling it unprofessional, disorganized and a nightmare to endure. Indeed, last year, all that was needed was a self-certified questionnaire by the candidates. This year, the SBA is requesting documents to verify application responses – but only after submitting an application – supporting decisions and frustrating applicants.

July 8, date of its last report, the SBA had approved 3.8 million EIDL loans for a total of $ 217.2 billion.

The SBA has increased its management capacity and resources for the EIDL program, the SBA said in a statement. This helped streamline the application process, he said. Data that shows this positive trend will be available on the SBA’s website this month.

“There will be an announcement very, very soon,” said spokesperson Shannon Giles.

Soon is not soon enough for small business owners who say they desperately need the cash.

“They shouldn’t call it the emergency aid loan. They should call it the ‘loan if you’re lucky’ so we don’t put our hopes on it, ”said Mike Tsinberg, owner of a New York-based company that makes video equipment.

Tsinberg also received an email telling him he was eligible for a raise. His original EIDL was $ 10,000. After sending emails in November, he was able to increase the loan to $ 150,000. In March, he received another email warning him that the loan limit had been increased to $ 500,000. He applied and for three months the SBA portal showed that his loan was not being processed. The SBA told him to wait. In mid-July, he received an email telling him that his application had been denied, but that he could reapply if he rectified the reasons for his denial.

But the SBA didn’t tell him what was wrong, he said.

“I would love to submit more supporting documents, but they did not specify what is missing,” he said. “You can’t email struggling business owners and tell them we can help you, and then put you in black hole limbo. This is not a good thing because then you start to rely on it.

Eagle-eyed consultants Trevor Curran and Linda Rey transformed their Connecticut business Aurora Consulting in March 2020 to help business owners apply for EIDL loans. Consultants are permitted to charge up to $ 2,500 to assist a client with the EIDL loan.

By mid-summer, they had submitted 40 applications and all were approved. There were no real complications, they said.

“As much as the SBA has a bad reputation, it isn’t given enough credit for what it did last year with the EIDL program,” Curran said. “It was actually stupidly easy to get the money last year. The app was essentially an online questionnaire, and there was no verification. This is the miracle of the EIDL program.

But this year, the duo had 17 hours a day to get EIDL increases approved for clients.

A major problem is that the self-certified numbers that the SBA requested last year must match the documents, including tax forms, that it is requesting this year. Many companies had yet to file their tax returns last year and were estimating their data. The SBA is now declining them for the gap.

The EIDL loan asks for gross income for the period from February 1, 2019 to January 31, 2020. But the tax return forms are based on a different period from January 2019 to December 2019. This continues to trip up EIDL loan officers, who don’t get a lot of training, Curran said.

“Just this morning, I had to explain to an SBA loan officer that the tax reporting period is not the same as the EIDL disaster period,” Curran said. “He told me he hadn’t received any training.

Curran and Rey, who now have 225 clients across the United States, run a Youtube channel to help business owners overcome complications. A survey on their channel indicated that of 500 respondents, 78% were applying for a business loan for the first time.

But the customer service line that could help these business owners isn’t worth calling, Curran said. Candidates are being told something that has no value or is false, he said. If you can’t resist calling them, ask yes or no questions, he said.

For small business owners, the EIDL loan money often determines whether they close or make it until 2022. Curran and Rey cried as they described the emotional reactions they witness when telling applicants that they are ‘they have been approved.

A client who makes wigs for cancer patients and didn’t have the money to attend his father’s funeral last year was recently approved.

“We both cried,” Curran said.

The loan application is the same questionnaire as last year. But there are still questions that can easily trip candidates over. For example, if you copy and paste your business name into the form, it won’t let you continue but won’t tell you it’s because you didn’t enter the name manually.

Curran and Rey say the SBA must respond to complaints from business owners, ranging from issuing detailed instructions on how to complete an EIDL application to improving communication.

“Right now the only thing they’re consistent about is how consistent they are,” Curran said. “They need clear messages.”

Curran tells business owners to “stop asking questions and start submitting” the required documents.

Likewise, Rakkasan’s Friedman is urging the SBA to go to Congress and ask for more staff and waive some of the verification requirements to get loans faster.

Friedman knows a little more about a large-scale system backup, having worked at the Department of Veterans Affairs in 2010 when there was a growing backlog of disability benefit claims. There was a sense of urgency to fix the system so that the government could ensure that veterans received their benefits.

He doesn’t see that with the EIDL program, he said.

“I have seen processes like this accelerate,” he said.